The International Financial Reporting Standards (IFRS) website has issued a reminder of some of the changes that companies need to look out for when IFRS 9 and IFRS 15 are brought in next year.

IFRS 15 is the most relevant to most types of business because it covers revenues from all contracts with customers, while IFRS 9 mainly applies to financial institutions.

Companies will have to apply IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on or after 1 January 2018. The IFRS website reminds companies that “now is good time for a recap on the changes the standards will bring and the range of helpful materials available on our website”.

IFRS 15 changes

IFRS 15 will replace IAS 18 Revenue and IAS 11 Construction Contracts. It will establish a comprehensive framework for determining when to recognise revenue and how much revenue to recognise. It is expected to increase comparability among companies across sectors and markets.

IFRS 15 will affect almost all companies because it covers revenue from all contracts with customers, except for revenue from leases, financial instruments and insurance contracts.

Read here for more information on implementing IFRS 15. 

IFRS 9 changes

IFRS 9 will replace IAS 39 Financial Instruments and bring together the following aspects of accounting for financial instruments:

• classification and measurement;
• impairment; and
• hedge accounting.

The IFRS website states: “IFRS 9 is relevant to many different companies but will have the greatest effect on financial institutions. In practice, the most significant change will be in the way financial institutions account for loan losses. IFRS 9 replaces the incurred loan loss model of IAS 39 with an expected loan loss model. The new model is likely to result in greater loan loss provisions by financial institutions and will provide investors with useful information on changes in credit risk exposure.”

Read here for more information on implementing IFRS 9.